Allahabad Bank NIM grows, eyes overseas expansion

Allahabad Bank NIM grows, eyes overseas expansion

Mumbai:State-owned lender Allahabad Bank’s net interest margin (NIM) for the September quarter surged half a percentage point to 3.34 %, a top official said.

The bank’s NIM in the year-ago quarter was 2.84 %.

The higher NIM helped the bank post a net profit that beat the analysts expectation by a wide margin.

The bank reported a net profit of Rs4.03 billion rupees in July-September from Rs3.34 billion a year ago.

A Reuters poll of brokerages had forecast a net profit of 3.67 billion for the quarter.

“Resources position is good. CASA is growing around 24 %. Deposits in general have grown by 30 %," chairman and managing director JP Dua told Reuters.

Dua attributed the increase in net non-performing assets to 0.56 % to the government’s farm loan waiver scheme.

“Whatever slippages is there is for this quarter and is mainly due to agriculture scheme. The debt relief scheme came to an end on 30 June. So whatever Rs200 million was left, we had to classify it as NPA," Dua added.

He, however, said there were no concerns over asset quality of the bank.

In the year-ago quarter, the net NPA was 0.35 %.

The state-owned lender expects its deposists and advances to grow 25 % in FY11, Dua said.

“We had given a guidance and accordingly we expect 25 % average growth, taking our business size to Rs2,200 billion for this year," Dua added.

The bank is also planning to expand overseas and has approached the country’s Reserve Bank of India for licences.

“We have approached RBI for licences in Shanghai, Dhaka and for a second branch in Hong Kong at Kowloon," Dua said.

It is planning to open 47 branches by the end of FY11.

The bank, which had approved raising of Rs26 billion, is planning to raise Rs14 billion in the second half of FY11.

It plans to raise Rs14 billion through a mix of debt and equity and has approached the government for Rs10 billion capital infusion.